Some recovered oil blocks awarded under the defunct production sharing contracts (PSCs) since 1993 are among 17 oil acreages the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plans to offer prospective bidders under the 2024 bid round.
Between 1993 and 2015, the Federal Government carved out 30 oil blocks located in deep waters and awarded to various investors that participated in various licensing rounds held over the period
A breakdown of the awarded oil blocks showed that eight each were awarded in 1993 and 2000, while the other 14 were sold in 2015.
However, since the awards, many of the oil prospecting licenses (OPLs) could not progress in their operations to the point of conversion to oil mining leases (OMLs), as a result of their owners’ inability to mobilise the requisite capital.
An OPL holder has the exclusive right to explore for and develop oil and gas resources within the defined area of his license. Once oil and gas production has reached commercial volume over ten years, the OPL would be expected to convert into an OML, giving the owner the exclusive right to explore for, develop, and continue produciing oil and gas under a fresh contract.
But, the NUPRC said on Monday in Abuja disclosed a number of the PSC oil blocks awarded in 1993 have been found to either be idle, not producing, under-performing, or added no value since they were acquired, as they have not been brought to maturation.
The Nigerian Extractive Industries Transparency Initiative (NEITI) in its 2021 Oil and Gas Industry Audit Report identified at least 17 of such idling and non-performing oil acreages and recommended to NUPRC to invoke its powers under the relevant provisions in the Petroleum Industry Act (PIA) 2021 to revoke the licenses and re-award them to interested investors.
Apparently, in reaction to NEITI’s recommendation, the Commission Chief Executive of NUPRC, Gbenga Komolafe aannounced that the Commission was currently carrying out a comprehensive review of the performances of these licenses with the view to taking appropriate steps to recover them and put on offer under the 2024 Oil Licensing Bid Round.
Komolafe who was speaking on Monday in Abuja at the maiden edition of the NEITI House Dialogue said the recovered oil licenses would be included among the 17 the Commission plans to put in the basket of oil acreages to be offered to prospective bidders under the 2024 Oil and Gas Bid rounds in line with the dictates of the provisions of the PIA.
“It is my pleasure to announce to you our strategic partners and key stakeholders that the 2024 Nigeria oil and gas licensing round as prescribed under the Petroleum Industry Act will commence from the end of this month and we will be going offshore to market it to prospective investors. The process has commenced. We have set very clear criteria to guide the implementation of the process, to effectively and transparently monitor from the beginning to the end,” Komolafe said.
“We are currently carrying out a comprehensive regulatory review of those awarded PSCs that were awarded in 1993 that were found to have been under-performing, not been brought to maturation, idle assets that have no value, not producing. We will invoke the relevant provisions of the law to bring them into the basket of oil blocks to be bidded for under the current competitive bid process as provided under Sections 73 and 74 of the PIA 2021, which has now outlawed discretionary awards. Award of assets now have to go through established competitive and transparent bidding process,” he added.
Under the current bid round, he said a total of 17 oil blocks would be on offer, including the 12 deep offshore assets for which the bid process commenced in 2022, but had to shelfed, since the termination date was too close to the last election.
“The Commission decided to put a hold on that process, to avoid being mired in the political process. We have decided to complete that process now by having 12 oil blocks on offer. But, the country’s target is to complete the bids for 17 oil blocks between now and early next year,” he explained.
“We have a calendar in place that will run to the end of January next year. We have put in place an electronic system that will be in the public place for civil society and the media to see the process from the beginning to the end.
“The process requires the Commission to be very diligent in the conduct of its affairs in a transparent and open manner. The calendar will be available to the public so that members of the civil society and the media can follow through the processes to know what the Commission is doing at every stage,” he said.
He said the 2024 oil licensing round, which is being designed to enhance quality data set, would be conducted electronically in a fair, transparent, and competitive bidding process in a non-discriminatory manner as stipulated under Sections 73 and 74 of the PIA. The assets being put on offer are mostly greenfield assets. So, they are virgin assets.
In his introductory remarks at the event, the Executive Secretary of NEITI, Ogbonnaya Orji, said the NEITI House Dialogue was being organized as a quarterly briefing session for NEITI stakeholders.
“NHD will host notable policy makers in Nigeria’s extractive industries and related sectors, who will address issues that are of interest and topical to the industry.
“The NHD will also get the invited policy maker to provide an update or status report on the implementation of NEITI report recommendations as it concerns the agency. This is with a view to deepen, not just government oversight and reforms in the extractive sector, but also to make it inclusive of all stakeholders,” he stated.
